UNIVERSITY OF THE EAST - CALOOCAN

College of Business Administration

Ann Margarette I.
Sambilay
BMG 114
BSAcT3H / MWF /
11:30-12:30
Dr. Rosalinda B.
Lacerona
 I. TITLE OF THE CASE:
II. TIME CONTEXT: July 2013 (The Company is still operating in the present.)
III. SUMMARY/ABSTRACT:

Ingvar Kamprad founded IKEA in 1943 as a mostly mail-order sales business. It

began to sell furniture five years later. The first Möbel-IKÉA store was opened
in Älmhult, Småland, in 1958 (Möbel means "furniture" in Swedish). The first stores outside
Sweden were opened in Norway (1963) and Denmark (1969). The stores spread to other
parts of Europe in the 1970s, with the first store outside Scandinavia opening in
Switzerland (1973), followed by West Germany (1974).

IKEA is a Swedish-founded Dutch-based multinational group. They designs and sells

ready-to-assemble furniture, kitchen appliances and home accessories. It has been the
world's largest furniture retailer since at least 2008. It was founded in Sweden in 1943 by
then-17-year-old Ingvar Kamprad, who was listed by Forbes in 2015 as one of the ten
richest people in the world, worth more than 40 billion dollars. The company's name is
an acronym that consists of the initials of Ingvar Kamprad (name of founder), Elmtaryd (the
farm where he grew up), and Agunnaryd (his hometown in Småland, southern Sweden).

Older IKEA stores are usually blue buildings with yellow accents (also
Sweden's national colours) and large minarets. They are often designed in a one-way layout,
leading customers counter clockwise along what IKEA calls "the long natural way" designed
to encourage the customer to see the store in its entirety (as opposed to a traditional retail
store, which allows a customer to go directly to the section where the desired goods and
services are displayed).

In accordance to their business expansion in different countries, the author wants to

come up with an effective strategy in order to meet the demands of various government
rules and regulation in order better serve the customers. In addition to this, the author also
wants to think of an effective course of action in dealing with countries having different
preferences and culture without imposing too much fee and sacrificing the quality of the
product in case the prices seemed to lower.
A. VISION:
“At IKEA our vision is to create a better everyday life for the many people. Our business
idea supports this vision by offering a wide range of well-designed, functional home furnishing
products at prices so low that as many people as possible will be able to afford them.”

B. VALUES:
C. CORPORATE SOCIAL RESPONSIBILITY:

PEOPLE & PLANET

We’re going all-in for a more sustainable future

At IKEA, we want to have a positive impact on people and the planet. That’s why
we’re going all-in on things that really matter, from switching our entire lighting range to
energy-efficient LED to sourcing all of the cotton we use in our products from more
sustainable sources.

We’re also working towards 100% renewable energy - producing as much as we

consume in our operations - and sourcing all of our wood from more sustainable sources by
2020. Since 2009, the IKEA Group has invested and signed agreements to invest EUR 1.7
billion in wind and solar. But we’re not done yet. We’re just getting started.

D. AWARDS AND RECOGNITION RECEIVED:

“100 Best Companies for Working Mothers” by Working Mothers magazine 2004 -
2005

“100 Best Companies To Work For” by Fortune 2006

IKEA Canada LP “Canada’s Top 100 Employers” by Mediacorp Canada Inc.

IV. STATEMENT OF THE OBJECTIVE
To be able to come up of an effective strategy to better serve the Indian market.
To be able to produce a high quality products with lower prices.
To be able to find suppliers that can meet the quantity demands of every IKEA
branch.
To be able to have a harmonious relationship with their employees.
To be able to use alternative products in order to help saving the planet and avoid
having legal suits.
To be able to continue doing projects that can help the citizens of the country.

V. CENTRAL PROBLEM

How could IKEA tweak its globally successful business model to suit the
requirements of India without breaking the model?

VI. AREAS OF CONSIDERATION (SWOT ANALYSIS)

a. Kamprad created Stitching INGKA a. Since they are furniture manufacturing

Foundation then he transferred all of the
IKEA’s equity as a n irrevocable gift to the
Foundation. With this, the whole IKEA
Company is protected from the squabbling
and the family of Kamprad can never
destroy or sell the company in the future.
b. Since 1943, Kamprad already increased
his product range by selling accessory
things for their main product which is the
furniture and the product range is
constantly growing in the present.
business, their products is priced highly..
b. IKEA cannot seem to dominate the Indian
markets because of its various traditional
household.
c. When they established their store in India,
they faced a major problem of availability of
space for their stores because the lands in
India are a lot smaller compared to the
other countries.
d. Operating in India would mean operating in
suburban locations and the customers will
c. IKEA established a good relationship with
their customers. This is so because, unlike
the traditional retail stores where the
customers could go directly to the needed
section, IKEA encouraged its customers to
go through its store in it’s entirely.
d. Their store is designed in a one-way layout
in the anti-clockwise direction so that
their customers can see clearly their
products.
e. The company’s product developers and
designers worked directly with suppliers
and customers and they employ the
concept of do-it-yourself.
f. The company sells in flat packs. Thus there
is no assembly cost, no shipment costs and
mostly products are sold on catalogues
which help them reduced the operational
costs and lower the process.
g. An important feature of IKEA is the
Smaland (Swedish for small lands), the
parents can leave their children in the
playground while they are shopping.
a. Expansion in emerging markets and
having the average income household
purchase to the store.
b. Having assembly and delivery services for
their customers without charging too
much for freight and assembly.
c. Converting in to a more technology based
business where in the furniture or their
other products have technologically
advanced features.
d. Establishing an internship programs to
students for them to experience building
furniture from the scratch, especially to
the engineering students.
e. Having a discount and loyalty customers
feature for the satisfaction of their
customers.
need to travel miles from the city to acquire
products in IKEA. In addition to this, the
supplier will find it difficult to deliver the
raw materials.
e. People in India prefer readymade furniture
or getting it made by their carpenters. Do-
it-yourself concept might not generally
work for the market in India.
f. Indian national also prefers being assisted
in shops and being guided on what product
should they buy and it is contrary in the
practice of IKEA.
g. IKEA is working towards reducing the cost
of their products but with this, the
customers found out that the quality of
their products are also reduced.
a. As years passed by, the company sales are
being threatened by the price wars among
its competitors. In addition to this, the
competitors pressured the suppliers to
boycott the IKEA.
b. Government regulations seem to differ
from every country where in they wanted
to expand with especially with India.
c. IKEA is likely to have a problem with the
environment. Though their raw materials
are readily available in the environment, in
today’s condition, it is decreasing in
quantity (e.g. because of illegal logging).
d. Because of various economical and
working conditions, outsourcing of the
right amount of raw materials and
products seems to be very difficult.
e. Both local and international stores is said
to be imitating the business strategy of
IKEA and they need to constantly improve
and develop their strategy.
VII. ALTERNATIVE COURSES OF ACTION (SWOT ANALYSIS)
a. This will help the company
to compromise ideas
beneficial to both parties.
b. It will not be costly
because IKEA need not
change their whole
methods and strategy in
1. IKEA needs to engage operating the business.
working in both Swedish c. This will help IKEA in
and Indian individuals to understanding the culture
better understand their of other people. Which will
culture. the customers’ will surely
appreciate.
d. There will be equality in
the ideas and in their
corporate structure thus
preventing the racial
discrimination will be
achieved.
a. There can be an assurance
that IKEA will not violate
government regulations
because the products are
made for the Indian
community.
2. Produce products that
b. Customers will surely buy
are only suitable in
the products because it is
Indian community to
made through their
meet the demands of
preferences.
their culture.
c. IKEA will have a good
company image because
they are able to adjust with
the various cultures across
the country.
d. This will help the company
expand their business line.
a. The employees needs to
adjust in a whole set of
environment and be as
open as possible in
accepting the ideas of both
parties.
b. This might be costly
because IKEA needs to
outsource their employees
to India.
c. There is a high possibility
that Indians will dominate
the discussions because
IKEA need all of the
information to effectively
and efficiently operate in
their country.
a. This will all be costly
because IKEA will change
their product and
supplier.
b. It can be said that IKEA
will start from the scratch
because they are entering
into a new cultural
operations.
c. The Corporate Structure
members might not like
changing everything in the
business strategy just to
acquire profits in the
Indian markets.
d. There are products that
are not essential in the
present but might be
essential to the Indians in
the future. They also need
other products.
 a. Their customers will be
satisfied because not
anyone knows what will be
the right materials suitable
for their needs and not all
people know how to
assemble a product.
a. The company might
b. This will be a new line for
experience making
the company and this
various rules, regulations
feature is not limited to
and amendment to suit
India only. It can be
the needs of the markets
imposed to other countries
in every country.
as well.
b. It can be costly because
c. Their employees can
the company needs to buy
achieve a career growth
3. Remain and enhance the an authorized van or truck
because they can
globally recognized to deliver the products
experience various
model. Enhance through and pay freight charges.
problems and situations
adding services suitable c. The company will need
dealing with customers
for the Indian market. numerous professional
(when they assemble
(e.g. assistance, delivery employees whom can
products in various
and assembly features) assemble properly the
places).
products.
d. When it comes to the
d. The delivery men can have
company, this strat egy
problems in weather
will lessen their concerns
conditions, unfinished
on how they can serve
roads and traffic and the
other countries because
customers might have a
they will just add new
bad review with IKEA’s
services and not totally
over all operations.
change the whole
traditional process.
e. With continuous
development of their
strategy, other companies
cannot imitate their
methods.

VIII. STRATEGY FORMULATION OR RECOMMENDATION

I therefore conclude that the best solution to the problem is alternative course of
action number 3 which is to remain and enhance the globally recognized model. Enhance
through adding services suitable for the Indian market. This can be done through adding
deliver, assistance and assembly services for their customers. A company needs to conform
in the rules, regulations and culture of the country where in they wanted to expand their
business with. But, changing the entire process or methods of the company will not be right
 because for years, that strategy is the main reason why they become very profitable.
Especially to IKEA even though their customers are claiming that they impose high process
on their products. Like other multinational companies, having franchise in different parts of
the world, they establish special premises and regulations to obey the policies of that
country. They also offer products designed especially in the preferences of the people there.
This is what I want to do with IKEA in dealing with their business in India. They just need to
add services compatible with the conditions and situations of the market there. In case
handout, it can be clearly pictured that Indians wanted to be assisted in choosing and
assembling their products. This is a very simple thing for a company so why not adhere to
the demands of the customers. Time will come that when the customers already know the
things they needed to know, their necessity of having assistance will be minimized. But for
the meantime, IKEA needs to serve this community putting all their effort.

IX. PLAN OF ACTION

1. IKEA after establishing amendments with the Indian government, need to plan on
where they will be building their store that will be accessible to the public yet spacious
foe their products.
2. IKEA needs to buy trucks or any other transportation means to deliver and assemble
properly the orders of their customers.
3. Employ professionals that can help their customers in assembling the product that
they have bought and make sure that these professionals also help their customers in
choosing the materials.
4. Always be updated in the current trends in India to suit the preferences of the
community with their products.
5. Make sure that their people in India is adhering to the government policies and
regulations so that there will be no suit imposed to them.

X. POTENTIAL PROBLEM

1. What if the available lands for IKEA are not spacious enough to conduct their business?
2. What if IKEA’s own delivery line isn’t enough to meet the delivery demands of the
customers?
3. What if some of their customer doesn’t like the way their assistants are treating them?
4. What if it will be costly for the company to follow every product trend in India?
5. What if the government imposes new regulations and IKEA find it difficult to conform
to this?
XI. CONTINGENCY PLAN

1. Well, they need to make a good building or store design to continue their operations.
They are a business engaged in innovation and building. Space related problems of the
company can be surely solved by them.
2. Partner with couriers so that there will be a delivery alternatives available with their
customers.
3. IKEA needs to be sure that their employees have the same goal with the company and
regularly conduct visitation during the operating hours to see how their employees
treat the customers.
4. The company needs to make product that will help their customers in the betterment
of their life. The company need not make every product trend, just those beneficial.
5. Remove the features of the company that will violate the regulations of the country.

Resources
https://seeacareerwithus.com/about-us/our-values/
https://en.wikipedia.org/wiki/IKEA